TNN
Mumbai: For the first time in the history of the Indian bond market, the government issued three different 10-year benchmark bonds in a single year, mainly to meet its higher borrowing needs. The government issued the third 10-year gilding this year on Friday at a yield of 5.85% per annum, maturing in November 2030.
Earlier in May, the government issued the first of three benchmark 10-year government bonds, while the second was issued in August. At Friday’s auction, new government security (G-Sec) worth Rs 8,000 crore was sold, according to RBI data.
Bond brokers, however, have pointed out that the appetite for gilts is waning in the current market situation. “Surprisingly, there were no trades in the ‘on issue’ segment of the G-Sec market,” said one bond broker. The “at issue” segment is a specialized window in the bond market where investors are allowed to trade a government bond before its issue with a predictive price (and therefore a yield). These transactions are settled after the bond price is fixed and issued by the RBI.
Traders said that with the economy returning to normal and the Covid vaccines expected to hit the market in a few months, risky trades are increasing in number as people again show their appetites for riskier assets. With G-Secs being one of the lowest risk assets, investor appetite is declining again and hence weak demand for even the generally most traded benchmark bonds, they said.
As of November 24, the total outstanding against the 10-year G-Secs issued in May of this year was Rs 1.1 lakh crore, while the figure corresponding to that published in August was Rs 1.2 lakh crore, according to RBI data.
Mumbai: For the first time in the history of the Indian bond market, the government issued three different 10-year benchmark bonds in a single year, mainly to meet its higher borrowing needs. The government issued the third 10-year gilding this year on Friday at a yield of 5.85% per annum, maturing in November 2030.
Earlier in May, the government issued the first of three benchmark 10-year government bonds, while the second was issued in August. At Friday’s auction, new government security (G-Sec) worth Rs 8,000 crore was sold, according to RBI data.
Bond brokers, however, have pointed out that the appetite for gilts is waning in the current market situation. “Surprisingly, there were no trades in the ‘on issue’ segment of the G-Sec market,” said one bond broker. The “at issue” segment is a specialized window in the bond market where investors are allowed to trade a government bond before its issue with a predictive price (and therefore a yield). These transactions are settled after the bond price is fixed and issued by the RBI.
Traders said that with the economy returning to normal and the Covid vaccines expected to hit the market in a few months, risky trades are increasing in number as people again show their appetites for riskier assets. With G-Secs being one of the lowest risk assets, investor appetite is declining again and hence weak demand for even the generally most traded benchmark bonds, they said.
As of November 24, the total outstanding against the 10-year G-Secs issued in May of this year was Rs 1.1 lakh crore, while the figure corresponding to that published in August was Rs 1.2 lakh crore, according to RBI data.
